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ale4655 [162]
3 years ago
13

If a payback period for a project is greater than its expected useful life, the project's return will always exceed the company'

s cost of capital. entire initial investment will not be recovered. project would only be acceptable if the company's cost of capital was low. project will always be profitable.
Business
1 answer:
Rudiy273 years ago
3 0

Answer:

entire initial investment will not be recovered.

Explanation:

Payback period is one of the methods used in capital budgeting.

Payback period calculates how long it takes for the amount invested in a project to be recovered from its cummulative cash flows.

For example, if a project costs $360 and the cash flow each year for its 6 years useful life is $120. The amount invested would be gotten back from the cummulative cash flow in 3 years.

But if a project costs $360 and the cash flow each year for its 2 years useful life is $120. The amount invested would never be gotten back the cummulative cash flow. Therefore, the entire investment amount will never be entirely recovered.

The project will always not be profitable

I hope my answer helps you.

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Ralph pays his workers $ 100 each, and labor is the only variable cost. At a quantity of 5000 chickens, how many workers does he
Flura [38]

Answer:

He hires 8 workers

Explanation:

The total cost is $1600 for 5,000 chickens minus the fixed cost of  $800, which equals $800. The total cost is total of fixed cost and variable cost as in absence of production the total variable cost is zero so from this we can conclude that total fixed cost is zero.

Then divide the total variable cost ($800) buy what Ralph pays his workers ($100), which comes to 8.

6 0
3 years ago
A machine costs $1,000 and has a 3-year life. the estimated salvage value at the end of three years is $100. the project is expe
AnnyKZ [126]
Cost of machine = $1,000

NPV of revenues = p( \frac{1- (1+RoR)^{-n} }{RoR} ) = 600( \frac{1- (1+0.1)^{-3} }{0.1} ) = $1,492.11

NPV of salvage value = FV ( \frac{1}{ (1+RoR)^{n} } )= 100( \frac{1}{ (1+0.1)^{3} } ) = $75.13

Total NPV = -1000+1492.11+75.13 = $567.24 ≈ $567
5 0
3 years ago
You are a​ risk-averse investor who is considering investing in one of two economies. The expected return and volatility of all
galben [10]

Answer:

It's best to invest in the second economy

Explanation:

The question does not provide information on the hypothetical economic expectations of the two economies, but as a risk-averse investor, it's a better idea to try to "spread" the risk instead of concentrating it.

In the first economy, conditions might or might not be good. If they are good, returns will be extraordinary because all stocks will provide good returns, but if conditions take a turn for the worse, all stocks prices will fall and the financial consequences will be catastrophic.

In the second economy, results might never be as good as in the first economy, but they also will not ever be as bad. The risk is spread between various stocks, and while some may fall in price, others will rise, and viceversa. For a risk-adverse investor, this a far better option.

3 0
3 years ago
When using the indirect method to determine cash flows from operating activities, an increase in prepaid expenses should be repo
Andrews [41]

Answer:

b. A deduction from net income in determining cash flows from operating activities.

Explanation:

An increase in prepaid expenses is deducted from Net Income. The reason behind it very simple and no rocket science is there. Lets take Insurance as a prepaid expense. You Paid in-advance for Insurance, it increase your current asset that is Prepaid Insurance BUT at the same time cash went out of the Business.

I hope I made it clear to you. If you still have any queries, feel free to ask me.

Thanks!

8 0
3 years ago
Assume there are currently five firms producing and selling fertilizer in the South American market. Also assume that the produc
Jobisdone [24]

Answer:

It is given that in an oligopolistic market, there are at first five firms. At the point when the quantity of fums diminishes to three, it implies that the all out yield will likewise decrease. It is on the grounds that, all the makers are delivering separated items. The inventory of merchandise won't increment in light of the fact that the makers would have expanded the creation before, if that was conceivable. Hence, the balance amount will fall and in view of decrease in amount, cost will increase.

Thus, equilibrium price will likely <u>increase</u> and the equilibrium quantity will likely  <u>decrease.</u>

3 0
3 years ago
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